U.S. shoppers more satisfied in 2006, especially online: survey

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Published: Feb 20, 2007 7:37 a.m. ET

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(This article was originally published Tuesday)

Americans are growing more satisfied with their shopping experiences, whether they are online or at brick-and-mortar sites, according to the University of Michigan's 2006 American Customer Satisfaction Index survey results.

The annual survey, being released Tuesday, found Barnes & Noble Inc.'s (BKS) barnesandnoble.com site ranked tops in customer satisfaction among retailers and service providers, scoring 88 on the survey's 100-point scale. It edged out Amazon.com Inc. (AMZN), which stayed flat from 2005 at 87.

But overall, Americans' level of satisfaction with goods and services rose nearly 2% to 74.9 from a year earlier.

Among traditional retailers, Publix Super Markets Inc. (PUSH) continued to lead with a score of 83, but Best Buy Co. (BBY), CVS Corp. (CVS) and Home Depot Inc. (HD) notched the biggest gains from 2005.

Home Depot scored its first improvement since 2001, increasing its score to 70 from 67. Meanwhile, smaller rival Lowe's Cos. (LOW) posted its lowest score since 2001 and fell to 74 from 78. Ironically, the man largely blamed for an 11-point drop in Home Depot's customer-satisfaction score between 2001 and 2005 wasn't at the home-improvement giant to see the turnaround. Former Chairman and Chief Executive Bob Nardelli stepped down Jan. 2.

Home Depot, which reports fourth-quarter results Tuesday, said its own "extensive" customer surveys showed that overall satisfaction has improved from both 2004 and 2005 levels. The retailer, which boosted spending in stores by $350 million in 2006, plans to announce additional spending plans for in and around its stores at its annual investor conference next week, the company said in a statement.

Lowe's declined to comment, citing a quiet period ahead of its fourth-quarter earnings release Friday.

"Maybe Home Depot has learned a lesson and perhaps Lowe's has forgotten it," said professor Claes Fornell, director of the University of Michigan's National Quality Research Center, which compiles the data.

Fornell said he's not surprised the U.S. consumer continues to lift the economy despite the housing slump, based on the survey results. "Rising wages, little inflation, and falling unemployment combined with higher customer satisfaction and strong consumer confidence suggest the trend in spending growth will continue to drive economic growth," he said.

The survey data suggest satisfied consumers will continue to prop up the economy, driving consumer spending growth of between 3.5% and 4.1% for the first quarter of 2007, the university said.

Overall, satisfaction with financial and insurance services also increased. Americans gave Wachovia Corp. (WB) the highest score among banks for the sixth consecutive year. Its score of 80 topped a score of 72 for each of the following: Bank of America Corp. (BAC), Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. (WLF). Wells Fargo, however, posted the biggest improvement from 2005, when it scored 67.

Scores for MetLife Inc. (MET) and Charles Schwab Corp.'s (SCHW) online brokerage increased the most from 2005 among financial services companies. MetLife and Northwestern Mutual Life Insurance Co. were tied for the top life insurance ranking, while Berkshire Hathaway Inc.'s (BRKA, BRKB) GEICO took the top spot among property and casualty insurers in the survey

Department stores and discount retailers were among categories where customer satisfaction declined. Federated Department Stores Inc. (FD) dropped to 71 from 74 after its 2005 acquisition May Department Stores. Target Corp. (TGT) also declined, to 77 from 78. Kohl's Corp. (KSS) kept the top spot among department and discount retailers, but like that of Wal-Mart Stores Inc. (WMT), its score was flat.

Travel web sites, especially small ones, lost ground in customer satisfaction, according to the latest survey. "One possible explanation is that brick-and-mortar travel agencies have begun to fight back by offering more attractive packages and pricing," Fornell said.

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